Total rewards and compensation systems in organizational management

Total Rewards and Compensation at KFC

Research any named company in a global environment and select three total rewards programs that demonstrate innovative monetary and nonmonetary options for expatriates.

When most people think of fast food, they think of McDonald's of course, but many consumers might not realize that one of the largest fast food chains in the world is KFC, formerly Kentucky Fried Chicken, which has expanded from its origins in the U.S. To become a truly multinational corporation. For instance, Lamb and McKee emphasize that, "KFC is the world's leading restaurant in the chicken category. Established by Colonel Harland Sanders in 1952, it has more than 11,000 restaurants in 80 countries and territories and serves about 8 million customers each day. In the United States, it is four times the size of its nearest competitor" (p. 197). Executives who are employed at KFC fall under the corporate umbrella of Yum! Brands which also owns and operates Pizza Hut, Taco Bell, Long John Silver's, and a&W All-American Food (Lamb & Mckee, 2005).

Moreover, the corporate parent and KFC are becoming increasing visible in other countries, with a corresponding increase in the importance of these overseas operations to Yum! Brands' annual revenues. For example, Lamb and McKee emphasize that, "In 2002, Yum!'s revenues exceeded $7.7 billion, and net income was $583 million. In total sales, only McDonald's was larger among quick-service restaurant corporations. KFC has been particularly successful outside the United States and accounts for about two thirds of Yum!'s international revenues" (p. 197). Moreover, Glover, Rainwater, Jones and Friedman (2002) report that in spite of a few cultural missteps, KFC expatriate executives have been responsible for establishing the fast food chain as a staple in many foreign countries, particularly Japan and China, where the company continues to expand. Likewise, a number of other multinational corporations have determined that a professional cadre of executives with international work experience is a viable method of building competitive advantage (Konopaske, Robie & Ivancevich, 2009). Clearly, these expatriates are a valuable asset for KFC and its parent corporation, and KFC has formulated some innovative monetary and nonmonetary incentive programs to reward them for their efforts which are discussed further below.

Assess the programs.

Many corporate executives on foreign assignments enjoy a wide range of perquisites as part of their overall compensation package, including per diem allowances, company vehicles, cost-of-living allowances and other benefits that their stateside counterparts might not enjoy. For example, in their book, International Assignments: An Integration of Strategy, Research, and Practice, Stroh, Black, Mendenhall and Gregersen (2005) point out that, "No one would argue that maintaining employees abroad is not expensive. In addition, in their efforts to make their international assignment compensation systems equitable, many have become quite complex" (p. 180). In response, multinational corporations such as KFC have been searching for compensation and benefits package that are more cost effective. In this regard, White and Druker (2000) note that, "International reward management for many years has been primarily concerned with the management of expatriate remuneration but, as multinational companies have sought increasingly to 'go local', interest has turned to the concept of national culture and its impact upon the design of payment systems" (p. 21).

This has certainly been the case with KFC and its burgeoning operations in many Asian countries where cultural factors that can affect business operations are particularly pronounced. For example, according to Briscoe and Schuler (2004), "In a highly successful strategy, KFC employed a first-generation Chinese-American to return to China to establish its chicken restaurants. These international employees may not be placed on a full expatriate compensation package, but rather may receive a form of hybrid compensation, with some aspects of the package received by a traditional expatriate and some aspects of local employees" (p. 219). Even though these KFC expatriate executives may not receive the full measure of the compensation package offered counterparts in other countries, these assignments are widely regarded as being important to achieving longer-term career goals, professional development and providing valuable work experience in cross-cultural settings (Konopaske et al., 2009).

Evaluate the monetary and nonmonetary programs based on selected criteria, such as employee motivation, organizational commitment, and employee satisfaction.